Payment processing may not be the most glamourous of topics but in a world increasingly driven by online shopping, it’s of vital importance to independent businesses.
The most prevalent and well-known name in the online payment industry is Paypal. Its installed user base is now so large that losing access to Paypal can become a huge problem for online vendors, since it allows for a super-fast, convenient customer experience.
Paypal has a problem with vapour products, though.
Up and coming British e-liquid manufacturers Supergood fell victim to their confusing and punitive policies this week, when their merchant account was frozen, along with the funds it contained.
Supergood managing director David Gilberts said that the company received no prior warning from Paypal:
“We heard from other businesses that something was happening, but no communication from PayPal”
Paypal reserves the right to close any account without notice. On the face of it, this might not seem unreasonable, but what happens to the legitimately earned money in an account closed by Paypal? It’s frozen, for up to 180 days.
This is extremely troubling to any independent business, as David Gilberts explains:
“Cash is king and holding any small business’ cash is detrimental to their ability to run.”
Freezing the funds of any independent business is problematic at the best of times, but in the current economic climate, just one interruption to cash flow can spell doom for a small outfit and the employees who rely on it for a living.
What’s more, Paypal’s terms of service are murky at best when it comes to vapour products. There is no mention of “tobacco products” in the standard user agreement.
However, businesses can apply for pre-approval to sell “non-cigarette tobacco products, e-cigarettes or prescription drugs/devices” through Paypal’s Acceptable Use page.
You can forgive smaller companies for not being able to divine the true rules of Paypal when they are so unclear.
Even more confusingly, when Supergood reached out to Paypal, they were met with an anti-vaping stance that is out of step with the body of evidence demonstrating the relative safety of vape products.
“They do not want to facilitate the sale of any vape related products.
“They feel there is not enough scientific evidence to ensure the products are safe. The science is there for all to see!”David Gilberts, Supergood
Paypal is a massive company and it’s understandable that they exercise caution when it comes to transactions they could be liable for. This doesn’t excuse the fact that they provide conflicting information to businesses, especially when they go on to freeze funds without warning.
If a payment processor chooses to not be involved in the sale of vapour products, that’s up to them. If this stance is absolute, though, why have the option to apply for the approval to sell such products and why separate it from the terms of service?
In any case, this stance makes Paypal seem archaic, in light of the recent Cochrane Review, a systematic review of research, which re-asserts vapour products as an effective smoking cessation aid that causes far less harm than conventional tobacco.
In addition to this, leading UK body Public Health England continues to stand by vapour products as a less harmful alternative to smoking.
Fortunately, Supergood customers can still make secure, convenient payments using debit/credit cards and the Klarna payment processing service.
For David Gilberts, this incident spells the end of any future relationship Supergood could have with Paypal, even if the situation is resolved.
“How can we rely on them in the future after this stunt? It is clear they want to wash their hands with us, so we will do the same with them.”David Gilberts, Supergood
Paypal has been contacted for comment.